Pensioners whose incomes have been decimated as their employers have gone bust are missing out on payouts of up to £465 a week because the Government is delaying a law change to suit its PR strategy, the outgoing pensions minister has claimed.

The rules being "needlessly delayed" will eventually boost the compensation owed to thousands of middle and high-earning workers with more than 20 years service at a collapsed company which is unable to pay their pension.

Once in place they will make savers - who have lost as much as half their pension - up to £24,248 a year better off for life, according to calculations done by Royal London, a pension firm.

The policy's enforcement has already been delayed by two years as a result of the Government's pension freedoms "taking over the Department for Work and Pensions" when they were introduced in 2015, sources said.

And now Baroness Ros Altmann, who left the DWP last week, has said that although the legislation is now "completely ready" it could be buried for months as it "does not suit the Government's current agenda".

The regulations do not feature on the list of laws due to be laid this week before Parliament rises on Thursday, meaning they will not come in until the autumn at the earliest, she said.

Lady Altmann told the Telegraph: "Before I left I worked hard to ensure the legislation was ready but I understand it will be further delayed, which is hugely frustrating.

"People with long service in their company are anxiously waiting for their higher pension payments to start, but this can only start from the date the regulations are actually laid. The Government must not delay the introduction of these regulations any further."

Ros Altmann stepped down as pensions minister last week Credit:
The Age and Employment Network

For every week it is delayed pensioners are missing out on up to £465 a week - or £24,248 a year - in retirement funds as the law does not entitle them to retrospective payments.

The rule will reform an "unfair" cap on the compensation paid out by the Pension Protection Fund, a Government-backed lifeboat scheme which currently pays over 200,000 savers' final salary pensions after their employer has gone bust.

At present the PPF imposes a limit on compensation for workers which takes into account their age but not their length of employment. This was originally brought in to curb giant pension payouts for "fat cat" executives being paid for by the PPF.

But following criticism that the cap was unfairly impacting long-serving middle earners who had accrued generous pensions, in 2014 the Government decided to change it.

Under the new system those with between 20 and 44 years of service will be handed an extra 3pc income a year for life, taking the maximum annual compensation for a 65-year-old from £37,420 a year to £64,362 a year.

Steve Webb, formerly pensions minister and the architect of the new rules, said “The compensation cap was originally introduced to prevent top executives getting huge payments from the PPF. But it has ended up catching long-serving workers who may have no other pension and who have given their life to the company.

"This was never the original intention and it is right that the cap should be lifted for those who have been in the scheme for many decades. The Government has the power to do this and should now get on with implementing this measure”.

A DWP spokesperson said: “Only a small number of people are affected by the PPF cap, the vast majority receive compensation based on 90pc of what they had accrued in their pension scheme. The long service cap will give additional compensation to anyone who has been capped and was a member of a pension scheme for over 20 years.”